World Bank projects 4.7% growth for Kenya in ’24

Kenya’s economy is forecasted to grow at 4.7 per cent in 2024, down from 5.6 per cent in 2023 and closer to the pre-pandemic average of 4.6 per cent from 2011-2019, according to the latest Kenya Economic Update. While growth is expected to gradually recover, structural imbalances are hindering efforts for faster, inclusive expansion.

The report notes that agriculture and services are slowing, with further risks of deceleration due to tighter macroeconomic policies, declining business confidence, and the April 2024 floods, which hindered private consumption. The industrial sector is weakening, with weaker housing demand caused by high interest rates.

World Bank Country Director Qimiao Fan emphasised that the slowdown could impact job creation and poverty reduction. He called for reforms in governance, fiscal management, and the business environment to improve Kenya’s economic conditions.

Structural reforms are critical, especially given fiscal constraints. Domestic borrowing has risen, pushing up interest rates and crowding out private-sector borrowing. Despite a projected primary surplus in FY24/25, interest payments, at 5.3 per cent of GDP and almost a third of total revenues, are keeping financing needs high.

According to the report, fiscal consolidation is key to managing Kenya’s debt risks, but it must be equitable, focusing on efficient and transparent expenditures.

The report also stresses the importance of women’s economic empowerment, noting that enabling women’s participation in income-generating activities could boost productivity, foster inclusive growth, and ease socioeconomic pressures.

Attribution: World Bank

Subediting: M. S. Salama